Work Opportunity Tax Credit- How Employers Can Retain WOTC Eligible Employees

The US Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who invest in American job seekers who have consistently faced barriers to employment. ?Employers may recoup some hiring investment by claiming a tax credit if they hire an individual in one of 10 WOTC Targeted Groups.? However, the WOTC Tax Credit has stringent filing deadlines and employment tracking requirements.

Retaining WOTC-eligible employees is a crucial best practice for optimizing your Work Opportunity Tax Credit (WOTC) program. ?The longer these employees are retained, the more credits the employer can capture. ?For example, a WOTC-eligible employee with a maximum allowable credit of $2,400 can be five times more profitable than an employee without a WOTC-eligible. ?Similarly, a veteran eligible for a $9,600 credit might be eleven times more profitable. ?So, how can employers retain WOTC-eligible employees and maximize these tax credits? ?Here are some strategies:

1. ?Bonus and Compensation

Providing additional compensation and bonuses is a straightforward approach to retaining WOTC-eligible employees. ?Monetary incentives can be very effective and come in various forms, such as performance, retention, or referral bonuses. ?Check with your human resources representative to ensure these incentives comply with state regulations.

2. ?Auxiliary Benefits

Employers are getting creative with auxiliary benefits to retain WOTC-eligible employees. ?Some ideas include:

AAA Memberships**: This helps employees resolve transportation issues that might prevent them from working.

Employee-Incentive Software: Programs like JoinPerry or Hubbux can improve overall employee retention by over 40%, helping retain WOTC-eligible employees.

Cafeteria Health Benefit Plans: Plans like Envita Health provide robust benefits at no cost to part-time and minimum-wage employees, adding significant value.

3. ?WOTC Target Group Marketing

Employers are increasingly targeting their recruitment efforts toward specific WOTC target groups. ?Here are a few examples:

Home Health Agencies: Marketing directly to SNAP and TANF recipients through state and county offices.

Trucking Companies: Targeting former military personnel and ex-felons and partnering with “soldier transitioning outplacement” services and state and federal prisons.

Inclusive Job Descriptions: Including WOTC information in job descriptions can make candidates feel included and comfortable applying, showcasing the employer’s commitment to diversity.

4. ?Retention Bonus

Offering retention bonuses can be a significant motivator for WOTC-eligible employees. ?For instance, a staffing firm might offer veterans a $500 bonus upon reaching their six-month anniversary. ?Other companies provide smaller incentives, such as $50 gift cards, upon achieving certain milestones.

5. ?WOTC Labor Pool Management

Employers who identify and track WOTC-eligible employees are more likely to retain them. ?Simple engagement strategies can be very effective:

Regular Communication: Sending emails or texts to check in with WOTC-eligible employees.

Personalized Interactions: Inviting employees to pick up their paychecks in person and greeting them with a small treat like a cookie or candy.

Retaining WOTC-eligible employees doesn’t have to be complicated or expensive. ?By implementing these simple yet effective strategies, employers can maximize the full benefits of the WOTC program and create a robust WOTC Optimization Program.